April 2011 Manufacturing Data is Really Bad

The headline press release from US Census says manufacturing fell in April 2011 1.2% (seasonally adjusted).  Although the unadjusted data remains within the long term YoY growth rate, order backlog (booked orders not shipped) stopped growing.

The above graph is based on unadjusted dollars value of shipments – not counts.  If Econintersect adjusts the above graph using the Producer Price Index, a different conclusion is drawn.

At 1.6% inflation adjusted new order YoY growth – April 2011 barely kept up with population growth.  This data really is down significantly from last month.  And the there was significant downward reduction in last month’s spectacular growth almost negating our last analysis (analysis here).

This backward downward data revision for February and March data is not unique to manufacturing, but is appearing across many data sets.

Backlog, which has been growing approximately 1% per month over the last 6 months, grew only 0.0924%.  Backlog growth confirms real growth – or lack of growth.  There is every indication that manufacturing has too many employees for the amount of new orders now coming in.

Extracts from the press release:

New orders for manufactured goods in April, down two of the last three months, decreased $5.5 billion or 1.2 percent to $440.4 billion, the U.S. Census Bureau reported today. This followed a 3.8 percent March increase. Excluding transportation, new orders decreased 0.2 percent.

Shipments, down following seven consecutive monthly increases, decreased $0.9 billion or 0.2 percent to $444.5 billion. This followed a 3.1 percent March increase.

Unfilled orders, up twelve of the last thirteen months, increased $2.5 billion or 0.3 percent to $850.7 billion.  This followed a 0.7 percent March increase. The unfilled orders-to-shipments ratio was 6.08, up from 5.96 in March.

Inventories, up eighteen of the last nineteen months, increased $7.7 billion or 1.3 percent to $587.8 billion. This followed a 1.4 percent March increase. The inventories-to-shipments ratio was 1.32, up from 1.30 in March.

The main driver of this terrible data is durable goods, although all data is relatively weak.

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